THE UNKNOWN QUANTITY | TRATON GROUP

PowerTorque looks at the growing structure of the TRATON Group.

It’s an interesting situation when one of the largest trucking groups in the world remains largely unknown, at least in Australian trucking circles.

The average driver will obviously know of the various brands of Scania, International and MAN, but it’s highly unlikely they have any clue about the name of the group that coordinates them, or those that head up the management team.

We are talking here about TRATON Group. Launched into the public arena at the IAA Show in Hanover, Germany last year, the bosses in Europe would have you believe the name reflects an abbreviation of TRANSFORMATION, coupled with TRADITION and TRANSPORTATION.

If you are not impressed by that snippet of information, then give a thought to why four years ago, Andreas Renschler, then the chief of Daimler Trucks, changed allegiances and became the head of Volkswagen Truck and Bus.

The coming together of various forces led to the operations of Volkswagen Commercial Vehicles combining with Scania and MAN, accompanied by the bold statement that the final entity created would achieve the dominant position amongst the world’s truck and bus manufacturers.

TRATON Group has not yet dominated the world stage to the point that it has become a household name, but there are now more pieces to the original pie, as MAN and Scania have been joined by VW Caminhoes and Omnibus in Brazil. Also coming to the party is RIO, a digital open platform to merge customer business through a broad range of smart cloud-based solutions; plus Solera digital technology, a strategic partnership with Hino Motors Japan. There’s also a 25 percent stake in SinoTruck in China, plus a 17 percent stake in Navistar Group and International Trucks of North America.

So, whether you picked up the news over your morning coffee or not, the TRATON Group is advancing and growing and at some stage it will affect our market.

One week after the United Nations global climate summit in October, the TRATON Group hosted its Innovation Day in Sweden. The proximity of the event, both in terms of world attention to global warming and climate-control sensitivity was not lost on those attending, as CEO Andreas Renschler spelt out clearly the steps that will be taken by this emerging juggernaut within a short timeframe.

“The goal of saving our planet moves people. And this mass movement has impact and power. It is more than a community of interest – it is a shift in our society that pushes us; We all have a huge need to act,” said Mr Renschler.

“The reduction of CO2 emissions is probably the biggest challenge for mankind, our industry, for our customers – for every one of us. It affects a huge, complex ecosystem. And transport is a core element of that. We are aware of the responsibility – and we take it very seriously,” he added.

For those that missed this particular TRATON Group party, the comments on the day suggest that now would be a good time to divest your stocks and shares portfolio of anything remotely connected with coal, particularly mining exploration, supply and coal-fired electricity generation.

Mr Renschler is no climate sceptic. As he heads up a corporate giant that includes, Scania, MAN, Volkswagen Commercial Vehicles and a chunk of International Navistar in the US, he is steering its progress towards electrification and e-mobility. In so doing he anticipates spending one-billion euros ($A1.63 billion) within the next five years in digitalisation of its products and services.

Mr Renschler fully expects that within the next 10-15 years, one third of TRATON Group’s trucks and buses can have an alternative drivetrain, with most of those being fully electric.

The keys to this progress in vehicle efficiency involve developing and working with modular componentry designs instead of completely, newly-engineered vehicles. In this way the group can drive customised innovation faster, be more individual, and more cost efficient.

As the world becomes more and more connected, TRATON Group will be merging the information supplied in real time by the trucks it produces out on the global road network, improving utilisation, reducing empty runs and idle times, while driving customers’ business to the next level.

These advances include autonomous vehicles, the combination of electric and electronic systems and the blending of new technologies with improved vehicle utilisation.

As far as the three major brands of International, MAN and Scania are concerned, the global bosses were openly enthusiastic in a previous conversation with PowerTorque about the synergies being established that will interlock their individual companies into cost savings and efficiencies that result from component sharing.

Henrik Henriksson, CEO and President of Scania, and Troy Clarke who is CEO and President of Navistar International, were extremely enthusiastic about the future.

“From a group perspective the idea is to create a common platform up to say 60 percent common, and then adapt it to the needs of the individual brands and the local markets and we need to work together to do that,” said Mr. Henriksson.

“We can create a common phase while maintaining the individuality to meet the needs of the brands and keep brand positioning. That goes for conventional powertrains,” he added.

The economies of scale that result from being a bigger buyer in the global market bring cost reductions and component sharing that can lead to MAN engines in International products, Scania Opticruise transmissions in MAN and International products and a rationalisation of components that could trend towards badge engineering, where drivelines are similar, yet marketed under a different name.

This premise is not unusual in today’s market, with Volvo, MACK and UD sharing engines and drivelines and the PACCAR brands of Peterbilt, Kenworth and DAF working with Eaton to share common engines and transmissions. Also up for synergy is Daimler Trucks North America, now linked with the German hierarchy for Freightliner and Mercedes-Benz to offer a common driveline of Detroit engines, transmissions, axles and differentials.

What is unusual, is that while European and North American company bosses are embracing the TRATON Group and openly espousing their support for the future, the individual sales operations for each brand in Australia are currently sitting under an imaginary umbrella of denial, something akin to the federal government and climate change.

When pressed that TRATON Group does in fact exist, the general comment from each brand locally is that it doesn’t affect operating conditions down under. That might be correct today, but it certainly isn’t going to be the case down the track.

Admittedly, much of the early work of TRATON Group companies is in the field of autonomy, something that is more Eurocentric than Australian. The group is making strides with networked vehicles, logistics, and autonomous driving, while developing common platforms for greater agility cost reduction.

Current research and development is therefore focused on digitalisation, and by the end of 2024, over one-billion euros ($A1.63 billion) in R&D expenditure will flow into this area.

“We want to move into the digital fast-lane and are continuing evolution from a hardware supplier to a provider of software and services,” explained Andreas Renschler.

Almost 2000 software engineers already work for the brands today, making up nearly 30 percent of all engineers employed at TRATON Group.

“Autonomous driving is not coming. It’s already here! We have already delivered the first vehicles and many tests are underway,” said Christian Levin, the TRATON Group COO and board member responsible for R&D.

Since 2018, an autonomous Scania truck has been used in a Rio Tinto mine in Australia and the Innovation Day enabled Scania to showcase its new AXL model, a new autonomous Scania concept vehicle without a driver’s cab (see pages 82-84 in this issue).

Before the end of this year Scania plans to put a bus in operation which will electrically and autonomously transport passengers for Nobina in the Stockholm metropolitan area. Early next year (2020), MAN kicks off large-scale practical testing together with the Port of Hamburg, where highly automated trucks will drive in some sections on the highway to the port.

On arrival, the driver gets out of the vehicle, whereupon the truck continues to drive autonomously to the Altenwerder container terminal. It is then autonomously unloaded and drives back to the driver on its own. MAN is currently simulating the port environment and testing the vehicle at its plant site in Munich.

The number of networked vehicles of TRATON Group’s customers is growing rapidly. At the end of 2018, approximately 450,000 vehicles networked. This increased to some 600.000 in 2019 and is expected to grow by 2025 to over a million vehicles. Since the beginning of 2019, almost every new medium and heavy-duty truck delivered by Scania and MAN has featured onboard connectivity.

According to consultancy company Deloitte, the telematics market alone will expand from 2.3 billion euros ($A3.75 billion) in 2016 to nearly 10 billion euros ($A16.3 billion) in 2026. Trucks currently operating in Europe, depending on the estimate, only operate on average at around 50-60 percent utilisation capacity. Intelligent digital solutions could help to considerably reduce the number of empty runs or vehicles that are under-utilised, with a corresponding reduction in CO2 emissions.

Model development cycles in the truck business usually result in a completely new truck generation being released only every 15 to 20 years, but for MAN the coming 12 months will be particularly exciting.

“At the beginning of 2020, we will roll out our new truck generation,” announced Joachim Drees, MAN CEO and member of the TRATON Executive Board.

“Replacing the current product line that was introduced in 2000, MAN’s new flagship is designed to set standards in terms of user-friendliness as well as connectivity – not only today’s requirements for digitalisation, automation, and drive systems concepts, but also tomorrow’s,” said Mr Drees.

Also, up for investment is the e-mobility area, and by 2025 TRATON Group plans to have spent over one-billion euros ($A1.63 billion) in electro-mobility.

“Increased market penetration by electro-mobility is highly dependent on charging infrastructure and the costs of purchasing and operating a battery-powered vehicle,“ said Mr Renchler.

“In the mid-term, we expect that the total cost of ownership (TCO) of battery-powered commercial trucks used in distribution services and city buses will be comparable with vehicles powered by fossil fuels. Battery cells will become less expensive, and their service life will grow.

“If all necessary prerequisites are in place at the right time, I expect that in the next 10 to 15 years thiry percent of our trucks and buses can have an alternative drivetrain, most of them fully electric,” he added.

To support this claim, Volkswagen Caminhões e Ônibus (VWCO) has signed the world’s largest purchase intention agreement for e-trucks – 1600 trucks have been ordered by the Brazilian beer and beverage producer Ambev, with deliveries scheduled to begin in 2020.

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